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8th International Conference of the

TOC Practitioners Alliance - TOCPA

26-27 October 2013, Moscow

TOC experience in conflict

solving (mediation)

Alexander Merenkov
Insurance company Severnaya Kazna Russia 2013
October 2013

Aleksander Merenkov
General Director of Insurance Company Severnaya Kazna
Russia, since 1996
Chairman of the Mediation Center of the Ural Chamber of
Commerce, mediator, trainer
Associate Professor of General Economic Theory
Department of the Ural Federal University.
Consultant in strategy, negotiations and sales
since 1998.
Insurance experience since 1994
Experience in publishing, commercial, medical
and telecommunication business.
Publications in electronic and printed media

Yekaterinburg
190, Soni Morozovoy Street
Office phone: +7(343) 262-3-316
Mobile phone: +7(909) 007-3-999
E-mail:merenkov@kazna.com
facebook.com/aleksandr.merenkov
Skype: gurusk
www.kazna.com

8 TOCPA

Information processing
Fact
Interpretation
Emotion
Conflict

8 TOCPA

Conflict-Solving Method

Military activities FORCE

Use of physical force- FORCE
Threatening and Intimidation - FORCE
Judicial and arbitration lawsuits RIGHTS
Negotiations INTERESTS
Mediation ( and other effective methods to
solve conflicts) - INTERESTS

It is a
triangle

It is a
rectangle

It is a
square

The core of the conflict

Interest vs. Interest

Position vs. Position

The core of the conflict

Solution sequence

Let talk
Understand views of the parties
Understand the core of the conflict
Come to the interests of the parties
Find mutually acceptable solution
Check for feasibility
Compose an agreement
Evaluate the satisfaction of the parties

Mediation and TOC

Position 1 + Position 2 = Conflict

Conflict = CLOUD
CLOUD = assumptions identification
Assumptions = Interests
Injections = conflict solving

Mediation and TOC

Injection workup with the parties on 6 layers
of resistance on
Action Plan Agreement = map of injections
Check for feasibility = Legitimate Reservations
Assessment of the result
Procedure
Result
Emotional

Example
Conflict between two business owners
Solution come to an agreement
Sequence of work see above

Step 1 What the parties came to the

mediation with
Short and emotionless description of the conflict from the perspective of
Party 1
Petrov owns 50% of Autotrade, LLC with Sidorov (other 50%). They
started their joint business in 2005 selling tires. Then, they decided to
construct a building, where car dealership, including a service center, will
be located. They raised a loan at Sberbank for the sum of RUB 30 mln.
And then the crisis struck (2008). There were difficulties with builders, the
city administration was procrastinating with the documents approval.
Petrov solved these issues himself, Sidorov did not help. The building
was constructed, but due to the overdue loan, it was not commissioned.
Sidorov took a floor under a rent agreement and promised to share 50%
of profit. Petrov found around two years ago that Sidorov understates the
income in order to decrease Petrovs share of profits. He filed a lawsuit to
recover the rent fee. He won the litigations.

Step 1 What the parties came to the

mediation with
Short and emotionless description of the conflict from the perspective of
Party 2
Sidorov owns 50% of Autotrade, LLC with Petrov (other 50%). They started their
joint business in 2005 selling tyres..Then they decided to construct a building to
host a dealership and service center. They raised a loan at Sberbank for the sum
of RUB 30 mln. And then the crisis struck (2008). There were difficulties with
builders, the city administration was procrastinating with the documents approval.
Petrov was solving these issues, Sidorov was financing, but as they were friends
did not take the documents proving the payment. The building was constructed,
but due to the overdue loan, it was not commissioned. Sidorov took a floor under
a rent agreement with a condition to share 50% of profit. Sidorov honestly shared
the income paying part for the rent fee, and part to pay the bills of Autotrade,
LLC, but did it on the pledge of the word of Petrov. Two years ago Petrov
demanded that the premises are freed for a minimum termination fee. Sidorov
refused. Litigations followed.

Step 2 Describe the expectations of

the parties position 1
What Party 1 ultimately wants
Sidorov should withdraw from the business
and leave the building to him.

Step 2 Describe the expectations of

the parties position 2
What Party 2 ultimately wants
Get half of the premises value

Step 3 Build a Cloud for each conflict

(or several)
Create a cloud following the specified sequence of entities
Need
Motivation of Party 1?
4

B
Recover time and
moral efforts 1,
contributed by Party 1
to construction

Common goal reached

through and
5

Want of Party 1

D
Keep the premises
and not pay any
compensation

Receive income
from the building

CONFLICT!

C
Recover the money
invested by Party 2
to construction

Need
Motivation of Party 2?

Receive half of
the premises
value

Want of Party 2

Where assumptions can be

unsurfaced

Expectations of others (they expect me to)

Assessment by others by certain criteria
Area of responsibility (I have no choice)
Authority (I have the right)
Generally accepted practice in this field
(people do not fly)

Step 4 Identify B-D assumptions

Formulated B-D assumptions. Check if the wording meet the above criteria for
assumptions.
B-D 1:Only
thanks to my efforts and connections the building was finally
1:
constructed
B-D 2: People who trust me and help me want to work in these premises
B-D 3: I did not receive any compensation in the course of construction

In order to [B]
I must [D],
Because

Receive income
from the
building

B
Recover time and
moral efforts 1,
contributed by Party 1
to construction

Keep the premises

and not pay any
compensation

Recover the money

invested by Party 2
to construction

Receive half of
the premises
value

Step 5 Identify C-D assumptions

Formulate C-D assumptions. Check if the wording meet the above criteria for
assumptions.

Receive income
from the
building

In order to [C]
I must [D],
because

Recover time and

moral efforts 1,
contributed by Party 1
to construction

Keep the premises

and not pay any
compensation

Recover the money

invested by Party 2
to construction

Receive half of
the premises
value

C-D 1:I
1: always recover my investments
C-D 2: I diverted the investment from another business
C-D :I
: did not gain any income in the course of the whole construction

Scrutinizing the assumptions

Check the offered assumptions against three first rules for
the direct arrows:
Rule 1: The Assumption should contain words directly
related to both statements.
Rule 2: Explain the connection, not the statement. Check if
the assumption is a repetition or elaboration (explanation)
of or D? We want not to see the repetition of the
statement, but we want the connection between and D
explained.
Rule 3: If we want and if, then (read the connection
from the left to right)
Rule 4: What is current prevailing mechanism by which the
party achieves [] by [D]?

Step 6 Identify D-D assomptions

Formulate D-D assumptions. Check if the wording meet the above criteria for
assumptions D-D.
[D] and [D] are in conflict,
because

Receive income
from the
building

B
Recover time and
moral efforts 1,
contributed by Party 1
to construction

C
Recover the money
invested by Party 2
to construction

D
Keep the premises
and not pay any
compensation

D-D 1: The parties do

not trust each other and
do not want to
cooperate

Receive half of
the premises
value

D-D 2: The parties do

not see a way out that
would satisfy both

Step 7 Create a table of assumptions

Enter 2 strongest assumptions B-D, C-D, D-D into the table

B-D

Assumptions:

1. Only thanks to my efforts and connections the

building was finally constructed
2. I did not receive any compensation in the course
of construction

C - D
1. I diverted the investment from
another business
2. I did not gain any income in the
course of the whole construction
D - D
1. The parties do not trust each
other and do not want to cooperate
2. The parties do not see a way out that
would satisfy both

Step 8 Find and write the Injections to

attack the assumptions
B-D

Assumptions:

1. Only thanks to my efforts and connections the

building was finally constructed
2. I did not receive any compensation in the course
of construction

- D
1.CI diverted
the investment from
another business
2. I did not gain any income in the
course of the whole construction

1.
D The
- D parties do not trust each
other and do not want to cooperate
2. The parties do not see a way out that
would satisfy both

Solution Injections:
B-D
1. Evaluate the contribution into
construction by efforts and
connections
2. Evaluate the size of compensation
3. Identify the process of receipt
C - D
1. Evaluate the diverted investments
2. Evaluate lost income
3. Identify the process of receipt
C - D
1. Use an independent valuator
2. Continue mediation to reach
agreement on the order of the receipt
of the income

Step 9 Select the most preferable Injection and

check if it satisfies and
Because.
.

Receive income
from the
building

Recover time and

moral efforts 1,
contributed by Party 1
to construction

Injection
1.

2.

C
Recover the money
invested by Party 2
to construction

3.
4.

Evaluate the size of

compensation of the
efforts and investments
of the parties
Evaluate the size of
income short-received
Identify the procedure
for indemnification
Receive indemnification

Because.
.

Steps 10-11 Possible solutions and

what the parties think of them
Step 10. Write the list of possible actions in this situation.
Step 11. Note desired or forced actions for each party.
Possible actions

Party
1
D

Party 2
D

Continue joint business receiving half of the income

Hire an independent director and receive half of the income

V V
V V

Give the business under a management of a professional MC and

receive half of the income

Withdraw from a business with a compensation of 50% of the premises

value
Sell the business and share the income equally

6 layers of resistance
Disagree about the problem = came to the mediator
Disagree about the direction of the solution=injections
Do not see benefits = how the injections lead to the interests
satisfaction
Negative consequences = negative branches = auxiliary
injections=map of injections
Obstacles = auxiliary injections = map of injections
Say yes, but do nothing = check the plan for feasibility =
auxiliary injections

Step 12. Injection (benefits)

Evaluate monetary value of mutual claims

Select the variant to meet them
Stop court litigations
Receive money for the building
Keep the relationships

Step 13. Injection (negative

ramifications)
Will not be able to continue joint business
Will be unhappy about the outcomes
Image of both parties may be damaged

Step 14.Injection (obstacles)

Will not be able to agree upon the value and
compensation procedure
Will not find a trustworthy valuator
Emotional claims will constantly arise

Step 15. Sequence of injections

Identify the mediator

Identify the independent valuator
Conduct independent valuation
Agree upon the valuation for the purpose of the
indemnification
Agree upon the indemnification procedure (chose
from previously identified alternatives)
Align the PR of the transaction to retain the image
Identify sanctions for breaching the agreements

Step 16.Feasibility check (legitimate

reservations)
In this process we check if:
1. Clarity is there
2. This exists
3. There is a cause and effect relationship
4. Cause sufficiency
5. There is another cause
6. Fire in the house
7. There are any predicted effects

Step 17 Check satisfaction of both

parties
Procedure 0-10 = clear understanding of the
procedure
Outcome 0-10 = result=map of injections
corresponds to the interests = assumptions
Emotion 0-10 = logical procedure eliminating
conflict

Conclusions
provides a clear logic for the mediation
procedure
The parties and the mediator clearly see the
conflict map
Benefits-obstacles-negative ramifications are
elaborated
Clear logic solves the task without emotion
Final solutions meet the interests-assumptions

 helps to come to terms